As losses pile up at Peloton, the company has started exploring a new revenue stream: Selling used equipment.
In August, Peloton ran a 10-day test of a certified pre-owned bike program. CEO Barry McCarthy has told analysts that the program is a top priority for the company.
“There will be some substitution behavior, I think, between certified pre-owned and growth in fitness-as-a-service because they both target basically the same segment of the marketplace, which is the value-minded shopper,” said McCarthy.
Last week, Peloton reported a quarterly loss of $1.2 billion and the company has lost money for six consecutive quarters as the pandemic rush for its products disappears.
Used bikes could stem that bleeding, but the company will have to compete with its own customers, some of whom are already looking to sell their bikes on Facebook Marketplace and other platforms.
That could be problematic as Peloton was offering a discount in the neighborhood of $500 on bikes, which still kept them above $1,000. Used bikes on Facebook can go for as low as $600, though (of course) they don’t have any sort of warranty.
In July, Peloton announced it was stopping in-house bike production to simplify its operations. The decision to rely solely on partners was the most dramatic step the company had taken at that time to reduce costs and a reversal of course after three years of making its own.
In August, the company confirmed it would make another big shift and begin selling on Amazon. It’s also redesigning its bikes so customers can assemble them at home and has said it will explore letting users beam its content to rival workout machines.
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